Secure Funding Pty Ltd v Torbeckin Pty Ltd

COSTS - Application for immediate taxation - Where circumstances justify order that costs may be taxed immediately - Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.20.1.

COSTS - Gross sum costs order - Whether appropriate in circumstances to fix gross sum or order taxation - Whether costs broadly reasonable - Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.07.

COSTS - Applicable principles where liquidators appeared as intervener - Where intervention was necessary to protect the intervener's interests - City of Burnside v Attorney-General of South Australia [1994] SASC 5136; (1994) 63 SASR 65 and Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878 considered.

1 This proceeding concerns the enforcement by the plaintiff (Secure Funding) of a loan agreement with the first defendant (Torbeckin). Secure Funding alleges that Torbeckin has failed to pay instalments of principal and interest in accordance with the loan agreement. Secure Funding also makes claims against the second defendant, Mr Jeremy Rowell (Jeremy), and third defendant, Mr Rodney Rowell (Rodney), in their capacities as guarantors of Torbeckin's obligations under the loan agreement.

(a) the costs of Jeremy's application by summons filed 2 May 2024 (Jeremy's summons) for leave pursuant to the inherent jurisdiction of the Court to file and serve a defence and counterclaim on behalf of Torbeckin in this proceeding. On 19 September 2024, the Court dismissed Jeremy's summons and delivered written reasons (Reasons); and

(b) Secure Funding's application for judgment in default of defence against Torbeckin pursuant to r 21.03(1)(c) of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules).

3 Torbeckin is the registered proprietor of the land described in Certificate of Title Volume 11487 Folio 268, the address of which is 392 Victoria Street, Richmond VIC 3121 (the Richmond property). On 6 December 2023, Torbeckin was placed into liquidation upon the application of a petitioning creditor unrelated to Secure Funding. Jeremy is a director and former shareholder of Torbeckin and the son of Rodney. Rodney is a former director and former shareholder of Torbeckin. The relationship between Rodney and Jeremy is, unfortunately, characterised by bitterness, mistrust and acrimony. This has resulted in numerous disputes between them, including in this Court and other forums.

4 On 21 June 2023, Secure Funding commenced this proceeding by writ indorsed with a statement of claim. On 27 July 2023, Torbeckin and Jeremy filed notices of appearance. On 22 September 2023, Rodney filed a defence to the statement claim and a notice for contribution directed to Torbeckin and Jeremy. On 8 April 2024, Jeremy filed a defence. On 3 November 2023, the Court ordered, inter alia, that Torbeckin file a defence by 24 November 2023. It has failed to do so. By summons filed on 20 February 2024, and subsequently amended on 5 March 2024, Secure Funding sought orders that:

(a) it has leave to proceed, in respect of the claims in its writ filed on 21 June 2023, as against Torbeckin, pursuant to s 471B of the Corporations Act 2001 (Cth) (Corporations Act);

(b) pursuant to r 2.07 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic) (Miscellaneous Civil Proceedings Rules) Secure Funding have leave to file an application for judgment in default of defence pursuant to r 21.03(1)(c) of the Rules and recover possession of the Richmond property.

5 On 22 March 2024, the Court granted Secure Funding leave to proceed in respect of its amended summons filed 5 March 2024 pursuant to s 471B of the Corporations Act. This order was consented to by Torbeckin's liquidators and Rodney. Jeremy was represented at the time by solicitors and counsel and did not oppose it. By summons filed on 2 May 2024, Jeremy sought derivative leave, pursuant to the Court's inherent jurisdiction, to file a defence and counterclaim on behalf of Torbeckin. As I have already said, this application was dismissed.

6 For the purposes of this ruling I assume familiarity with the Reasons. Unless otherwise stated, definitions and terms used in ruling are the same as those used in the Reasons.

7 Secure Funding did not seek any order as to costs and submitted that it intends to seek to recover its costs pursuant to the Loan Agreement, Mortgage and Guarantee. It opposed any order that Jeremy pay its costs.

8 Jeremy opposed orders that he pay the other parties' costs. Jeremy submitted it is inappropriate and unjust that the Court order him to pay the other parties' costs on the basis that Rodney and the liquidators opposed his application for derivative leave in furtherance of their own interests instead of those of Torbeckin and its 'genuine stakeholders'. He submitted it is the conduct of the other parties that led to the application for derivative leave and that, accordingly, those parties should be liable for the costs of the application. He referred to the parties engaging in fraud and other scandalous conduct. He nonetheless submitted that, under the terms of the Loan Agreement, Secure Funding is entitled to recover its legal costs from Torbeckin.

9 Jeremy also submitted that any costs order was premature given that the scandal and fraud have not been finally adjudicated upon. In summary, Jeremy also submitted:

(a) it made more commercial sense for Rodney to have supported the relief sought in Jeremy's summons and that Rodney did not do so was because he wished to avoid his own misconduct being scrutinised by the Court;

(b) a scandalous deal has been struck between Mr Cull, Rodney and potentially Ms Gao and others to ensure that those parties, rather than Jeremy, derive the benefit of any remaining equity in the Richmond property;

(c) without Jeremy's application for derivative leave, Torbeckin's stakeholders and the Court would not have been privy to material which has exposed conduct of Secure Funding, Rodney and the liquidators, namely:

(i) the unconscionable conduct of Rodney;

(ii) breaches by the liquidators of their statutory duty of care and diligence arising under s 180 of the Corporations Act; and

(iii) the failure by Secure Funding to properly instruct its valuer in the course of considering Torbeckin's loan application.

10 Rodney seeks an order that Jeremy pay his costs and a further order pursuant to r 63.07(2)(c) of the Rules that those costs be payable as a gross sum or, alternatively, an order that the costs be taxable forthwith. Rodney relied upon an affidavit of Dejan Vangev affirmed 1 October 2024. Rodney submitted it was appropriate that Jeremy pay his costs because:

(a) Jeremy's application was unsuccessful and costs usually follow the event;

(b) Rodney was a party to the hearing of Jeremy's summons and Jeremy raised several allegations against Rodney that required Rodney's response;

(c) Jeremy's conduct of his application involved frequent delay which caused additional unnecessary expense to Rodney; and

(d) it was reasonable for Rodney to oppose the application where:

(i) he is a guarantor of Torbeckin's loan to Secure Funding, in circumstances where Jeremy's application would - and did - cause delay to the sale of the Richmond property and the accrual of substantial legal fees by Secure Funding; and

(ii) he is a substantial creditor of Torbeckin.

11 Rodney submitted that a gross sum costs order was appropriate. He sought costs in the sum of $43,254.18 (excl of GST). Rodney submitted in the alternative that there are reasonable grounds for the Court to order that costs payable by Jeremy be taxable immediately because:

(a) Secure Funding has indicated that, if it obtains possession of the Richmond property, it would agree to adjourn the claims as against Rodney and Jeremy until after the completion of a sale. Rodney has consented to this course whereas Jeremy has not;

(b) if the Richmond property is sold by Secure Funding, this may potentially satisfy the debt owed to it and discharge Rodney and Jeremy of their obligations to Secure Funding; and

(c) in the event Secure Funding obtains possession of the Richmond property, it will take considerable time to conclude a sale.

12 Rodney also submitted that Jeremy should, inter alia, be ordered to pay Secure Funding's costs of and incidental to Jeremy's summons because:

(a) the effect of no costs order being made against Jeremy is that Torbeckin - in effect, its creditors - will be required to pay Secure Funding's legal expenses with no ability to recover from Jeremy;

(b) the liquidators, acting in the interests of creditors, opposed the application; and

(c) had it not been for Jeremy's summons, the amount available for distribution to Torbeckin's shareholders would be substantially greater.

13 In seeking their costs, the liquidators submitted that their opposition to Jeremy's summons was in their capacity as representatives of Torbeckin and that, accordingly, their role was more in the nature of a party than as an intervener. It was submitted on this basis that costs should follow the event.

14 The liquidators seek an order that Jeremy pay their costs and a further order pursuant to r 63.07(2)(c) of the Rules that those costs be payable as a gross sum. The liquidators relied upon an affidavit of Jason Pomaroff affirmed 26 September 2024. The liquidators submitted, in the alternative, and to the extent that their role was that of an intervener, they should recover their costs as a successful intervener as the intervention was necessary to protect the intervener's interests, namely, to represent the interests of the creditors in the liquidation of the Company. Further, the liquidators submitted that:

(a) the liquidators' attendance was necessary to specifically address various allegations made by Mr Rowell concerning the liquidators' conduct of the liquidation; and

(b) the liquidators had a 'special interest' or 'legitimate interest' in attending the hearing of Jeremy's summons because, inter alia, the liquidators' attitude is a 'principal factor' relevant to the application for derivative leave.

15 The liquidators submitted that this is an appropriate case to fix costs on a lump sum basis as the costs claimed are relatively small and there is little dispute about the amount of costs and that this would avoid the costs of taxation involving a self-represented litigant.

16 Pursuant to s 24 of the Supreme Court Act 1986 (Vic), the costs of and incidental to Jeremy's summons are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid.

(2) Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to -

...

(c) a gross sum specified in the order instead of taxed costs;

18 The purpose of r 63.07(2)(c) is to avoid the expense, delay and aggravation involved arising out of a taxation of costs. Circumstances that weigh in favour of the award of lump sum costs include, inter alia, that taxation might delay matters and add to costs, and costs were in respect of a small number of items in a broadly reasonable amount.[1]

If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.

20 In Dale v Clayton Utz (No 3),[2] Hollingworth J referred to three broad reasons that may require a departure from the general rule concerning taxation. These are:

(a) the conduct of the unsuccessful party;

(b) the likely delay before the final completion of the proceeding; and

(c) the interlocutory application involving a separate or discrete issue.[3]

21 As I have already said, Jeremy's summons was dismissed and Secure Funding, Rodney and the liquidators succeeded in their opposition to his application for derivative leave.

22 I am not satisfied that it is appropriate to order Jeremy to pay Secure Funding's costs of and incidental to Jeremy's summons. This is because:

(a) Secure Funding does not seek such an order;

(b) Torbeckin and Rodney may seek contribution from Jeremy for any amounts that they pay under the Loan Agreement, Mortgage and Guarantee for Secured Funding's costs of Jeremy's summons; and

(c) the making of an order that Jeremy pay Secured Funding's costs will not extinguish any liability that Torbekin and Rodney have to pay such costs under the Loan Agreement, Mortgage and Guarantee.

23 It is appropriate and just to order Jeremy to pay Rodney's costs of and incidental to Jeremy's summons. Rodney successfully opposed the application. Whether a deal has been struck between Rodney and others to deprive Jeremy of the benefit of the Richmond property is not relevant to the issue of the costs of Jeremy's summons. This is because I have not made any such findings in the Reasons. These matters have not been heard and determined. I reject Jeremy's submission that his application was necessary, in effect, to bring to the attention of the Court Rodney's conduct. I also accept Rodney's submission that it was necessary for Rodney to appear in circumstances where he is a guarantor of Torbeckin's loan to Secure Funding and, upon his contention, a creditor of Torbeckin. Moreover, the manner in which Rodney's opposition was conducted was reasonable and proportionate. There were numerous allegations concerning Rodney's conduct in relation to, inter alia, the lease of the Richmond property and the rent payable by Torbeckin, but he did not seek to dispute these matters on the hearing of Jeremy's summons. Rodney submitted that he was required to respond to many serious and scandalous allegations made by Jeremy.

24 Rodney relied upon the affidavit of Mr Vangev in seeking an order that the costs be fixed as a gross sum comprised of the following amounts:

(a) $24,686 (exclusive of GST) for fees charged by Rodney's solicitors, Hicks Oakley Chessell Williams; and

(b) $18,568.18 (exclusive of GST) for fees to Peter Caillard, counsel for Rodney.

25 The categories of work performed by Rodney's solicitors were further broken down as follows:

(a) Attendance on third defendant and communications with counsel: $3,878.00.

(b) Review of materials filed in the proceeding: $4,108.00.

(c) Communications with the Court and with the other parties to the proceeding: $1,045.00.

(d) Preparation of third defendant's affidavit dated 28 May 2024: $6,335.00.

(e) Preparation of third defendant's submissions dated 13 May 2024 and 28 May 2024 and 26 September 2024: $3,073.00.

(f) Preparation for and attendance at the hearing on 3 June 2024 and 5 June 2024 as instructing solicitor: $5,687.00.

(g) Preparation of costs affidavit dated 1 October 2024: $560.

26 I am not satisfied that is appropriate to order that Jeremy pay Rodney a gross sum for costs pursuant to r 63.07(2)(c). This is because I am not satisfied, upon the affidavit of Mr Vangev, that the sums claimed for Rodney's legal costs are broadly reasonable. None of the amounts for the solicitors costs are broken down by the number of hours and hourly rates with a description of the particular work concerning those hours. I am unable to determine who did the work and the hours spent. There is no itemisation of the fees charged by Mr Caillard. I am unable to determine the fee charged by Mr Caillard for today or what was attended to in preparation. I do not know whether he was involved, for example, in the preparation of Rodney's affidavit. Accordingly, I am not satisfied, based upon the present material, that the fees are broadly reasonable.

27 I am satisfied, having regard to all the circumstances, that the costs should be taxed forthwith. I accept there will likely be a delay before the final completion of this proceeding. This is because of the steps required for Secure Funding to exercise its right of possession including, inter alia, the coordination of a sale campaign for the Richmond property and any subsequent attendances required to complete any sale, particularly in light of the unusual features of the property. This justifies an immediate taxation of costs.

28 It is appropriate and just to order Jeremy to pay the liquidators' costs of and incidental to Jeremy's summons. The liquidators were granted leave to appear on Jeremy's application. In doing so, they were, on a proper analysis, performing the ordinary and well-recognised functions of an intervener.[4] I do not accept the liquidators' contention that their role in the application should be characterised as that of a party. No relief is sought against the liquidators.

29 The applicable principles concerning the cost of an intervener may be relevantly summarised as follows:

(a) an intervener has the rights, duties and liabilities of a party to a proceeding, but an intervener's interests are in no way the same as those of other parties to a proceeding;[5]

(b) as a general rule an intervener neither pays nor receives costs;[6]

(c) there is no 'usual practice' of ordering costs in an intervener's favour when the outcome of a proceeding accords with submissions advanced by the intervener.[7] This is in contrast to the position of a party to a proceeding, such as a plaintiff or a defendant;

(d) an intervener cannot expect, as a matter of course, that an unsuccessful party to the proceeding in which the intervener has intruded should bear the extra burden of the intervener's costs even if the intervention was well intentioned and proved to be of assistance to the court;[8]

(e) private litigants should not have to pay additional sums in legal fees for the general good of the administration of justice and in the elucidation of a statute of particular concern to an intervenor;[9]

(f) there are instances in which courts have made a costs order in favour of an intervener where the intervention was necessary to protect the interests of the intervener.[10] In City of Burnside v Attorney-General of South Australia, Debelle J observed that 'generally speaking, a successful intervener will recover costs only if the intervention was necessary to protect his interest';[11]

(g) there are instances in which courts have made an order for costs in favour of an intervener in circumstances in which the intervener had a 'special interest'[12] or a 'legitimate interest'[13] or an 'interest' in the proceeding[14] where those interests were different to a parties' interests;[15] and

(h) an order for costs either in favour or against an intervener must also take into account the role the intervener assumed and the intervener's participation in the proceeding.[16]

30 I accept that the liquidators' attendance was necessary in order to protect their interests and represent the interests of the creditors in the liquidation. The liquidators made submissions, which the Court accepted, concerning the liquidators' attitude towards the grant of derivative leave and the practical considerations of the grant of derivative leave. These matters were important in the disposition of the application and the Court was assisted by the intervention. The liquidators did not take steps to substantively address the various allegations of wrongdoing made by Jeremy against them in the course of his submissions. The liquidators' submissions were appropriately confined and assisted the Court. I reject Jeremy's submission that the liquidators opposed the application in furtherance of a 'scandalous dealing'. As I have already said, whether a deal has been struck between the liquidators and others to deprive Jeremy of the benefit of the Richmond property is not relevant to the issue of the costs of Jeremy's summons. This is because I have not made any such findings in the Reasons. These matters have not been heard and determined. The liquidators also submitted that they were required to respond to many serious allegations made by Jeremy concerning their conduct.

31 The liquidators also seek an order for costs in the gross sum of approximately $21,450.00, comprised of the following amounts:

(a) $6,875.00 (exclusive of GST) for fees charged by the liquidators' solicitors; and

(b) $14,575.00 (inclusive of GST) for fees to Adam Segal, counsel for the liquidators.

32 The liquidators rely upon the affidavit of Mr Pomoroff. This sets out a breakdown of the sum of $21,450.00. I am satisfied that this is an appropriate case in which to make a gross sum order. This is because the costs are reasonable and a taxation will mean that further unnecessary costs are incurred. I have considered the breakdown of the costs provided by Mr Pomoroff. I am also satisfied that the amount sought by the liquidators is reasonable. The hourly rates charged are reasonable and the matters attended to by the solicitors and counsel are reasonable.

33 Secure Funding submitted that it was entitled to an order for possession in default of Torbeckin filing a defence. It submitted that Jeremy had no standing to oppose the application and, in any event, none of the matters raised by Jeremy had any relevance to its application for judgment in default of defence. Rodney supported Secure Funding's application. Jeremy opposed the application and made detailed submissions. These addressed various matters including, inter alia:

(a) the lease agreement with Golden Cube, the works agreement and the valuation of the Richmond property;

(b) the financial impact of the lease and the works agreement;

(c) the conduct of the liquidators; and

(d) Jeremy's attempts to obtain refinance and terminate the winding up.

34 The gist of Jeremy's submissions is that, if Secure Funding is awarded possession of the Richmond property, there is a risk that the property will be sold at an undervalue.

(1) Where any defendant, being required to serve a defence, does not do so within the time limited, the plaintiff may enter or apply for judgment against that defendant in accordance with this Order unless Rule 2.07(1) of Chapter II applies.

(2) Judgment shall not be entered or given for the plaintiff unless an affidavit proving the default is filed.

21.03 Judgment for recovery of debt, damages or property

(1) Where a claim is made for the recovery of a debt, damages or any property, whether or not another claim is also made in the proceeding, and the plaintiff is entitled to judgment on that claim against any defendant in accordance with Rule 21.01 or Rule 21.02, the plaintiff may -

(c) for the recovery of land, enter judgment for possession of the land against that defendant;

(2) Upon entering judgment under paragraph (1), the plaintiff may also enter judgment for costs.

14.04 Service of defence

In a proceeding commenced by writ, a defendant who files an appearance shall serve a defence as follows -

(a) where the indorsement of claim on the writ constitutes a statement of claim in accordance with Rule 5.04, within 30 days after filing the appearance;

(b) where the plaintiff serves a statement of claim, within 30 days after service of the statement of claim; or

38 Rule 2.07 of the Miscellaneous Civil Proceedings Rules provides:

2.07 Judgment in default and summary judgment

(1) Judgment in default of appearance or pleading shall not be entered in a proceeding in a Commercial List that is managed by a Commercial List Judge unless a Commercial List Judge so orders.

(2) Nothing in this Order shall prevent a party from applying under Order 22 or 23 of Chapter I or Part 4.4 of Chapter 4 of the Civil Procedure Act 2010.

39 In Victorian WorkCover Authority v White,[17] Connock J said:

[13] It is well established that where there has been no appearance filed, or where there is no defence to a statement of claim, each of the allegations in the statement of claim is taken to be admitted, with the defendants being treated as though they had not defended the claim at all. As the Court of Appeal observed in Yang v Finder Earth Pty Ltd, where for any reason the contingency of judgment in default is to be anticipated in respect of what is said to be a claim against a defendant for a debt, '... the pleader must take care to ensure that any claim for the recovery of a debt is clearly pleaded as such. As in every case, care must be taken to ensure that all of the material facts necessary to establish the cause(s) of action are pleaded'. In the context of the operation of r 21.03 of the Rules, the same observation may also be made in relation to claims for the recovery of damages or the recovery of property.

[14] That said, and as was referred to by the Court of Appeal, the courts do not take an unduly technical or restrictive approach to pleadings. I also refer more generally to the observations regarding pleadings set out in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd & Ors.[18]

40 Secure Funding makes the following allegations, inter alia, against Torbeckin in the statement of claim:

Statement of Claim

1. The Plaintiff is and was at all material times a corporation duly incorporated and entitled to sue and be sued in its corporate name and style.
2. The First Defendant is and was at all material times:

(a) a corporation duly incorporated and entitled to sue and be sued in its own name at all material times; and

(b) the registered proprietor of the whole of the land described in Certificate of Title Volume 11487 Folio 268, the address of which is 392 Victoria Street, Richmond VIC 3121 (Land).

1. At the request of the First Defendant, and by a loan agreement dated 22 March 2021, the Plaintiff loaned money to the First Defendant.

Particulars

Loan agreement in writing dated 22 March 2021 signed by the First Defendant on 29 March 2021, being Account No 3547728 (Loan)

1. On or about 28 April 2021, the Plaintiff advanced funds of $1,632,000.00 to the First Defendant pursuant to the Loan.

Loan Terms

1. The Loan incorporated the following relevant terms:

(a) the Plaintiff's Commercial Loan Agreement and Guarantee Schedule (Schedule); and

(b) the Plaintiff's Commercial Loan Agreement and Guarantee Standard Terms and Conditions (Terms and Conditions).

1. The Schedule included the following relevant terms:

(a) a term that the total amount of credit was $1,632,000.00, payable at the First Defendant's direction; and

(b) a term that the First Defendant must make:

(i) 60 monthly interest only repayments calculated in accordance with the Terms and Conditions during the interest only period of 60 months commencing from the settlement date (as defined); and

(ii) 300 monthly principal and interest repayments of $9,475.63 over the remainder of the loan term; and

(c) a term that the First Defendant must repay the total amount owing on the date 30 years commencing from and including the settlement date (as defined).

1. The Terms and Conditions included the following relevant terms:

(a) by clause 3.1, a term that interest charges for each day are calculated at the daily percentage rate on the balance owing on the Loan for the end of that day;

(b) by clause 3.5, a term that the interest charges are higher if the First Defendant is in default under the Loan;

(c) by clause 4.1, a term that the First Defendant must repay the Plaintiff all amounts borrowed plus interest charges, the Plaintiff's fees and charges, government charges and any enforcement expenses;

(d) by clause 8.1, a term that the First Defendant would be in default if the First Defendant does not pay on time all amounts due under the Loan;

(e) by clause 8.2, a term that if the First Defendant is in default under the Loan, the Plaintiff may give the First Defendant a notice stating the First Defendant is in default, and that if the First Defendant does not correct the default within any period given in the notice or required by law, then the total amount owing becomes immediately due for payment and the Plaintiff may sue the First Defendant for the total amount owing or enforce any security, or do both;

(f) by clause 8.4, a term that if the First Defendant is in default, the First Defendant must pay interest charges at a higher or default rate on the balance owing under the loan and any other amount which is due for payment under the transaction documents (as defined) while the First Defendant is in default; and

(g) by clause 9.2(b)(v), a term that when requested by the Plaintiff, the First Defendant must pay the Plaintiff's reasonable expenses of enforcing the Loan and/or security listed in the Schedule (which includes the Mortgage as defined below).

...

Mortgage

1. By written mortgage registered at the Land Titles Office Victoria on 28 April 2021 number AU282859H (Mortgage), the First Defendant mortgaged the Land to the Plaintiff to secure the Loan.

2. The Mortgage incorporates the provisions of Memorandum number AA947 registered with the Land Titles Office (Memorandum).

Mortgage Terms

1. The Memorandum includes the following relevant terms:

(a) by clause 21.1, a term that, if an event of default occurs under the Loan, the amount owing (as defined) becomes payable on demand;

(b) by clause 21.2, a term that, upon the First Defendant's default the Plaintiff could, in addition to anything the law allows the Plaintiff to do as mortgagee:

(i) sue the First Defendant for the amount owing;

(ii) appoint one or more receivers; and

(iii) do anything a receiver can do under the terms of the Memorandum;

(c) by clause 18.1, a term that the First Defendant must pay the Plaintiff's reasonable costs of administering (including enforcing or attempting to enforce) the Mortgage.

Default and demands

1. In default of the Loan and Mortgage, the First Defendant failed to pay instalments of principal and interest totalling $167,152.54 as at 10 May 2023 (Default).

Particulars

Further particulars will be provided at trial.

1. As at 10 May 2023, the total arrears due and owing by the First Defendant to the Plaintiff, including payment arrears owing under the Loan, fees and costs, was $175,261.98.
2. On or about 11 May 2023, the Plaintiff sent a Default Notice (First Notice) to the First Defendant requiring the First Defendant to remedy the Default by 25 May 2023 and specifying that if the Default was not rectified by 25 May 2023, the Plaintiff may proceed to:

(a) accelerate the Loan under clause 8.2 of the Terms and Conditions, entitling the Plaintiff to the immediate payment of the full amount owing under the Loan;

(b) commence proceedings for possession of the Land and for payment of the total amount owing under the Loan and Mortgage; and/or

(c) exercise the Plaintiff's power of sale under the Loan and/or the Mortgage.

1. The First Defendant failed to remedy the Default by 25 May 2023 and the total amount owing pursuant to the Loan has now become immediately due and payable. The First Defendant remains indebted to the Plaintiff under the Loan.

(1) The full balance of the Loan in the amount of $1,870,836.72 due and owing as at 21 June 2023 remains outstanding; and

(2) The First Defendant remains in possession or control of the Loan.

...

1. Interest on the sum of $1,870,836.72 continues to accrue at the rates prescribed under the Loan, currently at the rate of 14.90% per annum (currently at $763.71 per day) capitalised on the 28th day of each month.
2. As a consequence of the First Defendant's failure to make the payments pleaded in paragraph 15 and the First Defendant's failure to comply with the First Notice:

(a) the First Defendant defaulted under the Loan and the Mortgage; and

(b) the Plaintiff became entitled pursuant to clause 21.2 of the Mortgage, to enforce the Mortgage.

AND THE PLAINTIFF CLAIMS AGAINST THE FIRST DEFENDANT:

(a) Payment of the Loan in the sum of $1,870,836.72 as at 21 June 2023.

(b) Interest on the sum of $1,870,836.72 with respect to the Loan from 22 June 2023 at the current interest rate of 14.90% per annum, currently $763.71 per day to the date of payment.

(c) Possession of the land described in Certificate of Title Volume 11487 Folio 268, the address of which is 392 Victoria Street, Richmond VIC 3121.

(d) Costs on a standard basis.

(e) Such further or other orders as the Court considers appropriate.

41 As I have already said, on 3 November 2023, the Court ordered Torbeckin to file a defence by 24 November 2023. It has failed to do so. I am satisfied that the statement of claim alleges the necessary facts to establish Secure Funding's claim against Torbeckin for possession. Each of the allegations in the statement of claim is taken to be admitted, with Torbeckin treated as it had not defended the claim at all. As a result, Secure Funding has established:

(a) Torbeckin borrowed funds from Secure Funding pursuant to the loan agreement (Loan Agreement), the terms of which comprised, inter alia:

(i) the plaintiff's Commercial Loan Agreement and Guarantee Schedule (Schedule); and

(ii) the plaintiff's Commercial Loan Agreement and Guarantee Standard Terms and Conditions (Terms and Conditions).

(b) There were terms of the Loan Agreement, contained in the Schedule, inter alia, that:

(i) the total amount of credit was $1,632,000.00, payable at Torbeckin's direction;

(ii) Torbeckin must make 60 monthly interest only repayments calculated in accordance with the Terms and Conditions during the interest only period of 60 months commencing from the settlement date (as defined) and 300 monthly principal and interest repayments of $9,475.63 over the remainder of the loan term.

(c) The Loan Agreement is secured by a registered mortgage over the Richmond property (Mortgage). The Mortgage was registered on 28 April 2021. The Mortgage incorporates the provisions of Memorandum Number AA947 registered with the Land Titles Office (Memorandum).

(d) There were further terms of the Loan Agreement, contained in the Terms and Conditions, that:

(i) Torbeckin must repay Secure Funding all amounts borrowed plus interest charges, Secure Funding's fees and charges, government charges and any enforcement expenses;

(ii) Torbeckin would be in default if it does not pay on time all amounts due under the Loan Agreement;

(iii) if Torbeckin is in default under the Loan Agreement, Secure Funding may give Torbeckin a notice stating Torbeckin is in default, and if Torbeckin does not correct the default within any period given in the notice or required by law, then the total amount owing becomes immediately due for payment and Secure Funding may sue Torbeckin for the total amount owing or enforce any security, or do both.

(e) If an event of default occurs under the Loan Agreement, the amount owing (as defined) becomes payable on demand.

(f) In default of the Loan Agreement, Torbeckin failed to pay instalments of principal and interest totalling $167,152.54 as at 10 May 2023.

(g) On or about 11 May 2023, Secure Funding sent a default notice (First Notice) to Torbeckin requiring Torbeckin to remedy its default by 25 May 2023 and specifying that if the default was not rectified by 25 May 2023, Secure Funding may proceed to, inter alia, commence proceedings for possession of the Richmond property under Mortgage.

(h) Torbeckin failed to remedy the default by 25 May 2023.

(i) As a consequence of Torbeckin's failure to make the payments due pursuant to the Loan Agreement and Torbeckin's failure to comply with the First Notice:

(i) Torbeckin defaulted under the Loan Agreement and the Mortgage; and

(ii) Secure Funding became entitled pursuant to cl 21.2 of the Mortgage, to enforce the Mortgage.

42 Jeremy's submissions did not identify any matters that are relevant to whether Secure Funding is entitled to judgment in default of defence. Jeremy has made various allegations of wrongdoing but there is no further application on foot in this proceeding for Torbeckin to bring any defence or claim against Secure Funding. Torbeckin has not filed a defence and the only defence that has been mooted - that proposed to be filed by Jeremy on behalf of Torbeckin in his application for derivative leave - was the subject of Jeremy's summons that was dismissed. As a result, it is not necessary to determine whether or not Jeremy has standing to oppose the application. Accordingly, Secure Funding is entitled to judgment in default of defence against Torbeckin. Secure Funding seeks possession of the Richmond property. It does not seek any other relief. It is entitled to an order for possession.

43 For the reasons I have said, I will enter judgment for Secure Funding against Torbeckin in default of defence pursuant to r 2.07 of the Miscellaneous Civil Proceedings Rules and r 21.03 of the Rules.

44 I will hear the parties on the precise form of the orders. In my preliminary view, the following orders are appropriate:

(a) Jeremy pay Rodney's costs of and incidental to Jeremy's summons, to be taxed forthwith on a standard basis if not agreed.

(b) Jeremy pay the liquidators' costs of and incidental to Jeremy's summons, fixed in the sum of $21,450.00.

(c) Secure Funding recover possession of the land known as 392 Victoria Street, Richmond, in the State of Victoria being the land more particularly described in Certificate of Title Volume 11487 Folio 268.

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[1] Gulfmead Pty Ltd v Smarrelli [2022] VSC 119 [56] (Attiwill J).

[2] [2013] VSC 593.

[3] Ibid [65]. See also Fairbank Haven Pty Ltd v Merkon Constructions Pty Ltd (No 2) [2024] VSC 104 (Delany J).

[4] See eg, Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653 [81]-[98] (John Dixon J).

[5] See Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878 [34] (Motor Trades) and Johnston v Cameron [2002] FCAFC 301 [18]-[19] (Johnston), citing Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 [53].

[6] Mandalinic v Stone (Liquidator) (No 2) [2023] FCAFC 176 [4] (Mandalinic).

[8] City of Burnside v Attorney-General of South Australia [1994] SASC 5136; (1994) 63 SASR 65, 67 (Burnside).

[9] Tonto Home Loans Australia Pty Ltd v Tavares (No 2) [2012] NSWCA 129 [7].

[12] Xat Ky v Australvic Property Management Pty Ltd (No 2) [2007] FCA 1785 [22].

[13] Motor Trades (n 9) [34]-[35], [38].

[14] Queensland North Australia Pty Ltd v Takeovers Panel [2014] FCA 591; (2014) 100 ACSR 358 [235].

[17] [2021] VSC 458.

[18] Ibid [13]-[14] (citations omitted) (emphasis added).